KKR likely to buy Gland Pharma for Rs 1,000 crore by month-end

The deal would mean an exit for existing investor Evolvence India Life Sciences Fund.
KKR, the global buyout fund, is likely to acquire one-third of Hyderabad-based Gland Pharma for a little over Rs 1,000 crore ($154 million). The deal, likely to be consummated by this month-end, will be a combination of fresh equity infusion into the company and buyout of the existing investor Evolvance India Life Science Fund, two persons familiar with the development told. The deal would value the company at around $500 million (Rs 3,000-3,500 crore). KKR would infuse about Rs 600-700 crore of the deal ($108 million) amount into the company to augment manufacturing capacity while the balance would be used to buy out the Evolvance’s stake in the company. Currently, promoter Ravi Penmetsa along with other Indian shareholders will continue to own about 60% stake in the company.

Established in 1978, Gland Pharma has the leadership position in India with low molecular weight heparin and other niche products in the cardiovascular and orthopaedic fields. In 1996, it has formed an equity alliance with Germany-based Vetter group to deliver parenteral products to the global market. “The deal will value the company at around $500 million (Rs 3,000-3,500 crore). KKR will infuse about Rs 600-700 crore of the deal amount into the company to augment manufacturing capacity while the balance will be used to buy out the Evolvance’s stake in the company,” said one of the person quoted above.

Gland Pharma promoters and vice chairman Ravi Penmetsa and Sanjay Nayar, MD and chief executive officer of KKR declined comments.

Following the consummation of the deal, its promoter Ravi Penmetsa along with other Indian shareholders will continue to own about 60% stake in the company. The company, which has reported an operating profit of about $45 million on a turnover of about $150 million in last financial year ended March 2013, aims at near five-time jump in revenues in the next five years. The company currently generates half of its revenues from the North American market and another 30 per cent from the domestic market while the balance 20 per cent of the revenues it earns from the rest of the world.

“After this round of fund infusion, the company will achieve critical mass with reasonable size to remain competitive in the global environment. KKR will come as purely financial investors and will navigate it to the next level,” said one of the persons.

“Going forward, scale of operation and distributions will be critical for the companies in the pharma sector. Gland Pharma that has already reported exponential growth over the last five years from Rs 125 crore in 2008 when it had roped in Evolvance India Life Science to over Rs 700 crore in 2013, it aims to maintain this momentum for another five years,” the person said. This would be the last fund raising by the company in near to medium term. “Eventually the company will go public and will be listed on Indian bourses in the medium term,” said another person quoted above.

Renuka Sugars in talks with UK, German firms to sell Brazil asset: German sugar producer Suedzucker AG and UK-based Associated British Foods Plc (ABF) are in talks with Shree Renuka Sugars Ltd’s power production unit in Brazil, two people close to the development said. Renuka Sugars is expecting to raise at least Rs 2,000 crore ($308 million) from selling stake in its Brazil business. Investment bankers estimate the total value of Renuka’s Brazilian operations at about $1.5 billion. Renuka is looking to sell its co-generation asset in Brazil at the moment. The companies Brazil business includes two subsidiaries Renuka do Brasil S/A and Renuka Vale do Ivai S/A. Standard Chartered Bank India, Motilal Oswal Investment Advisors Pvt. Ltd and law firm Crawford Bayley are advising Renuka Sugars on the asset sale. (Live Mint)

NTPC plans for acquisitions: State-owned power major NTPC today said, it was conducting due diligence to buy a couple of stranded power plants. The company which has a cash reserve of about Rs 18,000 crore (2.78 billion), has been approached by banks to acquire some stressed power plants as the assets have become non-performing assets (NPAs) to the lenders. (Business Standard)

OVL-IOC-Petronet consortia isin talks for stake in Yamal LNG: A consortium on ONGC Videsh Ltd, Indian Oil Corp (IOC) and Petronet LNG Ltd is in talks to buy about 9-10 percent stake in Russian natural-gas producer OAO Novatek’s $20 billion Yamal LNG Project. The Indian consortia is sending a team of officials to Russia this month for negotiations for a stake in the project that will aim to make 16.5 million tonnes of liquefied natural gas (LNG) a year and start shipments in 2016, sources with direct knowledge of the development said. OVL-IOC-Petronet were originally interested in taking up to 15% stake in the Yamal project, which also requires construction of an airport and port on the Arctic Ocean. But they would have to settle for a smaller stake after Novatek last week sold a 20% stake in the project to China National Petroleum Corp (CNPC). Total SA of France had in March 2011 bought 12% stake in the project for about USD 4 billion. Since then, it has raised the stake to 20%. (Money Control)

Sanjay Gupta plans to raise $1 billion for LIFE fund: After setting up multi-crore businesses from scratch, former bureaucrat-turned-entrepreneur Sanjay Gupta is now planning to help entrepreneurs with his newly-launched private equity fund Let India Fly for Ever (LIFE). Aimed at small and medium enterprises in the ‘late start-up phase’, the Rs 250-300-crore fund would provide capital solutions to enterprises for expanding their business. While a Securities and Exchange Board of India approval is being expected in 45-60 days. Gupta aims to wrap up the first round of financial closure within the next three months. The fund would seek to invest in Indian enterprises in media and entertainment, hospitality and tourism, healthcare and lifestyle sectors. He is also looking to raise the $1 billion for the fund over the next five years.